Forecast for success

Forecast for success

If you are caught using your mobile phone while driving in Britain you are fined £200. Not a lot, you might think. But wait, your insurance premium increases by 30%. That’s a real hit. Even so, I personally don’t think it is commensurate with the risk you bring to the life and limb of other people. Actually, if the car was moving I’d ban you for life. Even sedentary I’d increase the fine. Concentration is required to control a dangerous weapon.

Now consider being distracted driving a company. People in charge of large organisations are being distracted all the time. Distractions never stop. Why? The driver at the wheel of a car must have his priorities clear and stick to the disciplines of the road at all times. So it is with the driver of a company. What are those disciplines and can they be delegated?

You’d think everyone knew about cash flow by now. It appears not. Cash flow doesn’t mean you have to be in credit at the bank all the time. It means you have to know where your cash is coming from and where it is going to. And that means you must forecast with reasonable accuracy. Company failures are always the result of poor forecasting. There are, of course, times when you simply don’t know a tsunami is coming. You cannot forecast for every act of God. But a good forecaster is who to invest in if you want your business to succeed.

Why don’t we regularly teach forecasting? Why do our organisational structures seem to ignore it? Is it because we think it unfair to ask people to forecast in a VUCA world? We are being very stupid. It is unfair to ask someone to cross the road in a VUCA world. But if they don’t they will never get to the other side. Even chickens know that.

I was asked if you can delegate keeping an eye on the cash flow. Strangely, you can, but not in the way most people do it. No good telling a junior to watch the cash flow. They know they won’t get fired if the company sinks. But here’s how you effectively get your colleagues to join you in responsibility for the cash flow.

[1] Pay them well, very well. Then you will get good people to start with.
[2] Don’t set them targets. Give them incentives to set high targets for themselves.
[3] Tie very substantial bonus payments to achievement of successful forecasts. Don’t do this only for the boss of the unit, make his team part of it as well. You need their pressure to make this work.
[4] Tell senior people broadly which part of the business they will work in but don’t give them job descriptions. Job descriptions limit the area of responsibility. You want to enlarge it.
[5] When they make ghastly, costly mistakes (I’m not talking about fraud or crime) encourage them to share with suitable colleagues why and how to avoid the same mistake. Congratulate them on the learning involved.
[6] Treat your employees like the decent human beings they are. They may then treat you the same way.

None of us can forecast perfectly. A mixture of optimists and pessimists seems to produce the most reliable result. All you then have to do is concentrate their minds wonderfully. That is best done with a financial incentive.

Above all get them forecasting. The more they do so the better they will get at it.

And great forecasting will make your business tremendously more successful.